The final fee: Some
make you pay to close an account
some banks, it's going to cost you not to do business with
In the latest round of fee mania,
some banks -- mostly large, billion-dollar institutions -- are charging
customers to close their checking accounts.
It can cost as much as $10 to close an account,
on top of any monthly fees, according to a recent Bankrate.com
of the nation's top 10 banks, thrifts and credit unions.
Fees are needed because it's expensive for banks
to offer free or basic checking accounts, banking experts say. Competition
from brokerage houses and consumer finance companies has also cut
into banks' business, forcing them to charge for services.
impose fees galore
Checking accounts never used to be a profit center, but the banks
have realized that all those account services cost money to maintain,
says Chaney K. Campbell, a bank analyst with Sandler O'Neill &
Partners in San Francisco. "Banks realized they could continue to
up fees and make money off of those."
"There are fees for opening an account, closing
an account and moving cash from one account to another," says Ed
Mierzwinski, consumer program director of the U.S.
Public Interest Research Group, a consumer watchdog group based
in Washington, D.C. "I have nothing against anyone earning a profit.
But if banks want to make money, they should do it the old-fashioned
way -- by making loans to consumers, not by picking their pockets."
Mierzwinski says that during the past few years,
PIRG has tracked the newest bank fees, from inactive-account fees
and missing-signature fees to balance inquiry fees. "Banks charge
consumers for using (their automated teller machine) cards too much,
and for using them too little ... they even charge a consumer who
innocently deposits someone else's bad check."
The new NationsBank/Bank
of America giant charges a $10 fee if a checking account
is closed within 180 days of opening. That fee is in addition to
any regular maintenance fee the account may carry.
"The idea is, we try to spend considerable time
with the customer to identify the right kind of account for them,
so this is a processing fee," said Jerri Franz, a NationsBank spokeswoman.
"If you decide to switch to another bank product, there is not a
Union charges a $10 fee if a checking account is closed within
six months of opening. In response to customer outrage, the bank
did away with the fee briefly in 1997, but it has recently revived
the "administrative cost." As at NationsBank, the fee is used to
process a closed account, says Tara Bullock, a First Union spokeswoman.
To dodge this latest fee, what can a consumer
- Ask for a fee schedule upfront when opening
a checking account.
- Ask if there is a fee for closing a checking
account. If so, ask if the fee will be charged if the account
is closed within a certain time period -- for example, within
six months or one year.
- Scan monthly statements for announcements
of changing fees, especially if your bank has recently merged
- Shop around for banks with better deals,
especially on services that are frequently used.
- Consider going to a credit union or small
community bank, which sometimes offer better deals than banks.
Still, some large banks, including Citibank
Manhattan, do not charge a closing fee. Neither do small community
banks and credit unions, according to the Bankrate.com survey.
Customers value convenience -- even when they're
aware of fee increases. They are more likely to stay with their
longtime bank than they are to shop around for an institution with
The largest credit union in the nation, with
1.6 million members worldwide and $10 billion in assets, Navy
Federal Credit Union in Vienna, Va., serves military personnel.
Quick access to money and "minimal fee hassles" are important to
its members -- and closing an account is free, says public relations
specialist Loren Moeller.
Members of the State
Employees' Credit Union in Raleigh, N.C., don't get charged,
"We would have to have a very strong justification
for charging our members such a fee," says Robert S. Hall, vice
president of the credit union. "And unlike banks, we are held accountable
for any new fees by our members,"
-- Posted: June 29, 1999